CHAMBERS Global Practice GuidesBELGIUMRUSSIA TMT LAW AND PRACTICE: p.3 LAW AND PRACTICE: p.3 Contributed by Van Bael & Bellis Contributed by King & Spalding LawThe ‘Lawand &Practice Practice’ sections – provide easily accessible information on navigatingThe ‘Law the& Practice’ legal system sections when provide conducting easily accessiblebusiness ininformation the jurisdic on- tion.navigating LeadingContributed the lawyers legal system explain by when local conducting law and practice business at key in transactional the jurisdic- stagestion. Leading and for lawyers crucial explainaspects localof doing law andbusiness. practice at key transactional stagesKing and for & crucial Spalding aspects of doing business.

DOING BUSINESS IN BELGIUM: p. Chambers & Partners employ a large team of full-time researchers (over 140) in their2018 London office who interview thousands of clients each year. This section is based on these interviews. The advice in this section is based on the views of clients with in-depth international experience. RUSSIA

LAW AND PRACTICE: p.3 Contributed by King & Spalding The ‘Law & Practice’ sections provide easily accessible information on navigating the legal system when conducting business in the jurisdic- tion. Leading lawyers explain local law and practice at key transactional stages and for crucial aspects of doing business. Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

Law and Practice Contributed by King & Spalding

CONTENTS 1. General Structure of TMT Regulation 3.7 Rules which Govern the Use of Telephone and Ownership p.5 Numbers p.12 1.1 Statutes, Laws and Legislation p.5 3.8 Regulation of Retail Tariff p.12 1.2 Government Ministries, Regulatory Agencies and 3.9 Rules to Promote Service in Underserved Areas p.13 Privatised Entities p.6 3.10 Extent to Which Local Government Regulations 1.3 Developing Rules and Adopting Policies p.6 of Telecom Service is Pre-Empted p.13 1.4 Ownership of Telecoms Media Technology 4. Wireless p.13 Industries p.7 4.1 Important Companies p.13 1.5 Limits on Participation p.7 4.2 General Requirements for Obtaining a Licence/ 1.6 Restrictions on Foreign Ownership or Investment p.7 Authorisation to Provide Wireless Services p.13 1.7 World Trade Organisation Membership p.8 4.3 Transfer of Wireless Licences/Authorisations to 1.8 Appellate Process p.8 Provide Wireless Services p.13 1.9 Annual or Recurring Fees p.8 4.4 Spectrum Allocation p.13 2. Broadcasting/Media p.8 4.5 Procedures to Identify and Assign Spectrum 2.1 Important Companies p.8 Among Competitors p.13 2.2 Requirements for Obtaining a Licence/ 4.6 Unlicensed Spectrum Uses p.13 Authorisation to Provide Services p.9 4.7 Government Policy/Regulation to Promote Next 2.3 Typical Term for a Licence/Authorisation to Generation Mobile Services p.13 Provide Services p.9 4.8 Price Regulation for Mobile Services p.14 2.4 Transfer of Licences/Authorisations to Other 4.9 Regulation of Government and Commercial Entities p.9 Wireless Uses p.14 2.5 Spectrum Allocated p.10 4.10 Extent to Which Local Government Regulation 2.6 Restrictions on Common Ownership p.10 of Wireless Service is Pre-Empted p.14 2.7 Content Requirements and Regulations p.10 5. Satellite p.14 2.8 Difference in Regulations Applicable to 5.1 Important Changes p.14 Broadcasting Versus Cable p.11 5.2 General Requirements for Obtaining a Licence/ 2.9 Transition from Analogue to Digital Broadcasting p.11 Authorisation to Provide Satellite Service p.14 2.10 Extent to Which Local Government Regulation is 5.3 Transfer of Satellite Licences/Authorisations to Pre-Empted p.11 Other Entities p.14 3. Telecoms p.11 5.4 Spectrum Allocation to Satellite Service p.14 3.1 Important Companies p.11 5.5 International Union Membership p.14 3.2 Requirements for Obtaining a Licence/ Authorisation to Provide Services p.11 5.6 Provision of Service by Foreign-Licensed Satellites p.14 3.3 Transfer of Telecoms Licences/Authorisations to 5.7 Milestone and Due Diligence Deadlines p.14 Other Entities p.12 6. Internet/Broadband p.15 3.4 Regulations for Network-to-Network 6.1 Important Companies p.15 Interconnection and Access p.12 6.2 Regulation of Voice-Over-IP Services p.15 3.5 Accounting, Functional and Legal Separation p.12 3.6 Provisions for Access to Public and Private Land p.12

3 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

6.3 Interconnection and Access Regulatory Conditions to IP-Based Networks p.15 6.4 Net Neutrality Requirements p.15 6.5 Government Regulation of Internet/Broadband p.15 6.6 Over-the-Top Internet-Based Providers p.15 6.7 Extent that Local Government Regulation of Internet/Broadband Service is Pre-Empted p.15 7. Privacy p.15 7.1 Government Access to Private Communications p.15 7.2 Use of Encryption Technology p.16 7.3 Liability of TMT Companies for Content Carried Over Their Networks p.16 7.4 Obligation of TMT Companies to Block Access to Certain Sites or Content p.16 7.5 Obligation of the TMT Companies to Retain Customer Data p.17 7.6 Prohibited of Unsolicited Communications p.17 8. Future p.17 8.1 Status and Process of Convergence p.17 8.2 Changes to Statutes, Laws or Legislation p.17 8.3 Changes to Government Ministries, Regulatory Agencies or Privatised Entities p.18 8.4 Identification of Assignation of Additional Spectrum p.18

4 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

King & Spalding is a destination TMT practice, with a cli- ic regulatory changes in the area impacting foreign ownership ent list that includes some of the biggest names in the global and advertising on pay TV. Furthermore, it has considerable market. In recent years it has advised on issues related to the experience advising Hollywood ‘majors’ on film distribution organisation of mass media coverage of the FIFA World Cup and co-production matters in Russia, including co-financing 2018 to be held in Russia, international TV channel distribu- and compliance, as well as IP protection issues. The team’s tion in the country, regulatory matters and broadcast licensing other strengths are privacy and data protection work, which and privacy issues. King & Spalding counsels its TMT clients ranges from regulatory advice and counselling on internal pol- on complex, market-shaping issues, such as the restructuring icies and procedures for privacy compliance to internal audits of TV channels operations in Russia – hugely significant mat- and investigations; and technology matters covering software ters not only for the clients’ EMEA operations, but also for the and hardware development and licensing and work on online entire Russian pay TV market against the backdrop of dramat- activities on both regulatory and contractual sides.

Authors Alla Naglis is a partner and leads the Xenia Melkova’s principal areas of TMT and IP practices in King & Spald- practice are corporate and regulatory ing’s office. She represents matters within the TMT sector, advising Russian, US and European clients in a clients on employment issues, business broad array of matters requiring deep structuring, information distribution and industry expertise, including virtually all content production, as well as data legal aspects of the media and entertainment industry – for protection issues. An associate with the Moscow office of instance, matters related to production and financing, the firm, Xenia has extensive experience in advising distribution, broadcasting and related intellectual property foreign television channels on regulatory issues relating to issues within Russia. Alla also advises on e-commerce and their broadcasting activity and carriage deals in Russia. IT (including protection and enforcement of copyright and She also specialises in regulation of new technologies and related rights on the internet), technology and know-how IP matters, focusing on the film production and distribu- protection, plus licensing and domain name protection; as tion industry, software/hardware development and well as on privacy and data security matters. licensing matters, and personal data protection regulation.

1. General Structure of TMT Regulation and Ownership 1.1 Statutes, Laws and Legislation ties in the internet, including rules applicable to informa- The regulation of the Telecom Media and Technology indus- tion distribution intermediaries (such as social networking tries in Russia is formed primarily by several laws, most of sites), news aggregators, online search engines, and others; which have been broadly amended and supplemented over • Law No 2124-1 “On mass media”, dated 27 December 1991 the last five to ten years, as follows: (as amended) provides for the framework of regulation ap- plicable to mass media, including some of limitations on • Federal Law No 126-FZ “On communications”, dated 7 the content, and sets forth the procedures for registration July 2003 (as amended), which sets forth the main princi- of mass media and licensing of broadcasting activity (the ples of regulation of all activities and “Mass Media Law”); contains provisions on telecom licensing (covering a broad • Federal Law No 99-FZ “On licensing of certain types of range of operations) and requirements for the licence hold- activities”, dated 4 May 2011 (as amended) contains gen- ers (the “Communications Law”); eral provisions applicable to licensing requirements, with • Federal Law No 149-FZ “On information, information specific rules in respect of telecom and mass media being technologies and on protection of information”, dated 27 set, respectively, in the Communications Law and in the July 2006 (as amended) (the “Information Law”) is the key Mass Media Law (the “Licensing Law”); law governing the information distributions matters. Over the last three years this law has been most actively supple- Other laws that are not industry-specific but impact the mented with new rules and restrictions applicable to activi- TMT industries are:

5 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

• Federal Law No 436-FZ “On protection of children against troduced procedures and legal requirements in the form of information harmful to their health and development”, statements or guidelines. Such guidelines and comments are dated 29 December 2010 (as amended), which sets forth valuable as insight on the approaches adopted by the con- strict requirements for age rating of the content distributed trolling authority, but are not binding. via television, Internet, printed media and any other means (the “Children Protection Law”); The State Commission for Radio Frequencies (GKRCh) with • Federal Law No 152-FZ “On personal data”, dated 27 July the Ministry for Connection and Mass Communications is 2006 (as amended) (the “Personal Data Law”); responsible for allocation of spectrum and also monitors im- • Federal Law No 38-FZ “On advertising”, dated 13 March portation of radio electronic equipment and high frequency 2006 (as amended) governing advertising in all media (the devices. “Advertising Law”); • Federal Law No 135-FZ “On competition”, dated 26 July The Federal Radio Frequency Service reporting to Roskom- 2006, as amended (the “Competition Law”); nadzor is responsible for control and supervision of com- • Federal Law No 160-FZ “On foreign investments”, dated 9 pliance with the rules of use of the allocated spectrum. The July 1999, as amended (the “Foreign Investments Law”); service also collects fees for the use of frequencies. and • Federal Law No 57-FZ “On the order of making foreign The Federal Antimonopoly Service (FAS) ideals with market investment in legal entities of strategic importance for na- concentration and competition issues, and is the first review tional defence and state security”, dated 29 April 2008, as instance for deals that require approval under the Strategic amended (the “Strategic Investments Law”). Investments Law. Besides, FAS is overseeing advertising ac- tivities. While the above laws are cornerstones of the TMT regula- tion in Russia, the bulk of the rules expanding on and detail- 1.3 Developing Rules and Adopting Policies ing the various procedures and requirements is formed by Pursuant to the Constitution of the Russian Federation, the numerous regulations adopted by the Russian Government legislative initiative is vested in the President, the deputies and competent authorities in pursuance of the implementa- of the Federal Assembly (the parliament), meaning both the tion of the statutory rules and principles. lower house (the State Duma) and the higher house (the Fed- eration Council), the Government, as well as the legislative 1.2 Government Ministries, Regulatory Agencies bodies of constituent states within the Russian Federation. and Privatised Entities In reality, however, virtually all regulation in the TMT areas The Government of the Russian Federation adopts regula- gets initiated at the federal level. tions implementing the laws with respect to various aspects of all of the Telecom Media Technology industries. Every bill of law passes the Ministry of Justice and/or the special committee in the lower house of the Russian legisla- The Ministry for Connection and Mass Communications tive body, the State Duma, for legal review. of the Russian Federation is in charge of determining the state policy and developing regulation in the sphere of in- All drafts of regulatory acts have to be posted on the official formation technologies, telecom, mass communications and website – http://regulation.gov.ru/ – for public access and mass media, including Internet development and television discussion, with the few exceptions for state secret and other and radio broadcasting, printed media, and processing of sensitive national interests. However, given the overwhelm- personal data. The Ministry adopts regulations and orders ing pro-governmental majority in the Federal Assembly, it is to elaborate on various procedures introduced by the laws. not unusual for a bill of law initiated by the Government or the representatives of the majority party to be passed swiftly The Federal Service for Supervision in the Sphere of Con- despite the effectively unanimous criticism from the market. nection, Information Technologies and Mass Communica- tions (Roskomnadzor, or RKN) is the federal agency under The Ministry for Connection and Mass Communications the Ministry overseeing compliance with statutory rules. In and Roskomnadzor adopt regulations and other by-laws to that capacity, the agency monitors activities of the market set up the details of procedures and requirements specified actors and performs remote and on-site audits of compli- in the laws. In the process of developing certain procedures, ance. Roskomnadzor is also the licensing authority for mass these authorities often, although not always, invite industry media and telecom and the holder of registers of personal players for discussions. Roskomnadzor also promotes dedi- data operators, information distribution administrators and cated meetings with certain companies or groups to discuss prohibited websites. Within the framework of its activities, practical aspects of regulatory compliance and open issues Roskomnadzor from time to time publishes on its website in that regard. However, the authorities are not bound by commentaries on the application of some of the newly in- any recommendations and opinions expressed during such

6 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

meetings and may subsequently change the approach or in- 1.6 Restrictions on Foreign Ownership or terpretation of the law. Investment Russian laws contain a number of restrictions on foreign 1.4 Ownership of Telecoms Media Technology ownership and investment, both general and applicable Industries specifically to Telecom Media Technology industries. The There are both state-owned and private players in practically tendency over the last ten to 15 years is that such limitations all of the sectors of Russian TMT industries. Russia’s most have been tightening. popular television channel, Channel One, is 51% owned by the state. The second most popular channel Rossiya (Rus- The oldest restriction (in effect from 2001) precluded foreign sia-1), as well as a number of other nationwide channels are parties (and Russian entities with more than 50% foreign produced by broadcaster VGTRK (All-Russia State Televi- shareholding) from the direct ownership of Russian TV sion and Radio Company), a federal state unitary enterprise channels or broadcasters covering over 50% of the territory (ie, state-owned). State-owned operator Rostelecom is the of the country or its population. In 2014, the restriction was leader in fixed-line services. On the other hand, three major expanded to limit not only direct participation, but any type mobile services operators (MTS, Vimpelcom () and of foreign participation (whether direct or indirect) to 20% MegaFon) are private companies, as well as the leading sat- and to prohibit any forms of foreign control over any Russian ellite television operators, Tricolor, ER-Telecom and Orion mass media and broadcasters. The restriction led to massive Express. restructuring of TV broadcasting models in the market and withdrawal of some international media companies from the 1.5 Limits on Participation Russian market in early 2016. There are no specific requirements or restrictions on market concentration for the Telecom Media Technology markets; Foreign entities are not allowed to hold telecom licences in in all cases, general rules set in the competition laws ap- Russia, and foreign telecom licences are not recognised. ply. The general rule is that transactions involving parties meeting certain market position, value or revenue thresh- Similarly to the regulation on mass media and broadcasters, olds have to be cleared through the Federal Antimonopoly a 20% foreign control restriction was introduced in 2017 Service (FAS). However, there are certain limitations set for with respect to the online audiovisual services. foreign ownership and investment (see 1.6 Restrictions on Foreign Ownership or Investment, below). Besides, irrespective of the industry or market, there are gen- eral restrictions set on foreign investment in Russian com- At the same time, in a number of Telecom Media Technology panies. Under the Foreign Investment Law, any transaction markets in Russia (determined primarily on a geographical resulting in establishment of direct or indirect ownership by basis), the existence of natural monopolies is established, a foreign state, international organisation or an entity under which is understood as the market situation in which the their control of more than 25% voting shares in a Russian market demand needs are best served in the absence of com- company or acquisition of negative controls in respect of a petition. The natural monopolies in the sphere of publicly Russian company, is subject to a preliminary clearance by a available telecommunications services and postal services special Governmental Commission. are subject to specific regulation under the Federal Law No 147-FZ “On natural monopolies”, dated 17 August 1995 (as Another approval by the Governmental Commission is amended) and relevant regulatory acts, which, among other required under the Strategic Investment Law for transac- things, provide for tariff regulation in certain cases. Natural tions resulting in establishment of foreign control (broadly monopolies are subject to higher standards of information worded) over Russian companies qualifying as having stra- disclosure, and transactions entered into by, and investments tegic importance for national defence and state security. made in, natural monopolies are subject to separate review The importance for national defence and state security is by FAS. determined on the basis of the list of activities in which the company is engaged. Among such activities are: television or In addition to the above, some recent import replacement radio broadcasting in the territory where more than 50% of initiatives may be regarded as potential hindrances to free the population of any federal state resides; telecom services access to the market. These initiatives include the already by a company holding dominant position in geographical existing requirement for state agencies and enterprises to use borders of Russia (except for internet access services), and locally produced software and the potential limitation (being fixed-line services provided by companies holding domi- discussed) on the percentage of foreign telecom equipment nant position in the territory of at least five federal states of imported in Russia and used for network construction and Russia, or within the geographical borders of federal cities expansions. (Moscow, , Sebastopol).

7 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

1.7 World Trade Organisation Membership A claim can be filed within three months of the date when Russia has been a member of the WTO since 22 August 2012. the plaintiff became aware of the violation of its rights, sub- Russia has made commitments under the General Agreement ject to potential extension of the term in case of delay due to on Trade in Services (GATS), including additional commit- reasonable excuse. The plaintiff has to demonstrate which of ments by the Russian Federation on basic telecommunications his legal rights, freedoms or legitimate interests were violated services, with the list of Article II MFN exemptions, including by the decisions, act or omission of the relevant authority. certain limitations for the following. 1.9 Annual or Recurring Fees • Telecommunications services (excluding distribution of The users of spectrum pay a one-time fixed fee plus annual television and/or radio programmes) – mode (1): unbound fees in the amounts set by Roskomnadzor for each user spe- with respect to radio communication services including cifically. The amounts are determined on the basis of the satellite communication, except none with respect to other methodology adopted by the Ministry for Connection and satellite services provided by foreign satellite operators to Mass Communications which includes rates and coefficients any juridical person of the Russian Federation possessing that vary depending on the frequency range, the number a licence for telecommunications services (after three years of used frequencies (frequency channels) and technolo- from the date of accession); and mode (3): commercial gies applied for the use of the spectrum. For GSM, UMTS, presence is allowed only in the form of juridical person of IMT-MC-450, LTE standards and their modifications the the Russian Federation, and the total foreign participation amounts are calculated for each decision by the State Radio in the charter capital (voting shares) of incumbent opera- Frequency Commission on allocation of frequencies and/or tors (listed in the annex to the protocol) may be limited to each licence for telecommunications services with the use of 49% for a period not to exceed four years after the date of radio frequency spectrum. accession. • Audio-visual services (sale and rental) – mode (3): com- Apart from the above, all operators holding licences for tel- mercial presence is allowed only in the form of a juridical ecommunications services are obliged by the Communica- person of the Russian Federation; in limitations of national tions Law (Article 60) to pay 1.2% of their revenues minus treatment: unbound with respect to subsidies and other taxes quarterly to the universal service fund, a reserve of forms of State support, including access to the financial funds for support of universal telecom services development and other material resources of the State. and maintenance of the data base of ported mobile numbers. • Audio-visual services (cinema theatres only) – mode (1): unbound; mode (3): commercial presence is allowed only in the form of a juridical person of the Russian Federation; 2. Broadcasting/Media and authorisation from local authorities on a non-discrim- inatory basis is required, taking into account city develop- 2.1 Important Companies ment planning and programmes of social and economic Russian television market is dominated by terrestrial broad- development in their jurisdiction; in limitations of national casters. Federal channels have the largest audience and most treatment: unbound with respect to subsidies and other of them are mandatorily available via any operator’s network forms of State support, including access to the financial (see 2.9: Transition from Analogue to Digital Broadcast- and other material resources of the State; and unbound ing below). The main broadcasters are state-owned or con- with respect to timing and selection of repertoire for se- trolled Channel One, VGTRK (All-Russia State Television lected segments of the population, for example repertoire and Radio Company), and Gazprom Media Holding. The for children or indigenous ethnic communities or other largest-by-audience privately owned broadcaster is CTC ethnic groups. Media.

1.8 Appellate Process Since the introduction of 20% foreign ownership limitation Decisions and actions or omissions by regulatory authori- in Russian mass media in 2014, the National Media Group ties can be challenged within the administrative procedure (NMG) – a media group with close governmental connec- either by appealing to the higher authority in the chain of tions – has gained a substantial market share (estimated as command (for example, for Roskomnadzor that would be 20%) of the Russian pay TV market by obtaining distribu- the Ministry for Connection and Mass Communications), tion rights to foreign TV channels through partnering (in or by filing a claim with the court. Starting from 15 Septem- the form of joint ventures or otherwise) with a number of ber 2015, the specific procedure to challenge the decisions major international media players. and actions or omissions by state, regional or municipal au- thorities is set forth in the Russian Code of Administrative According to iKS-Consulting, in 2016 privately owned Na- Proceedings. tional Satellite Company (brand name Tricolor) was the plat- form with the largest pay TV audience in Russia of 12.15

8 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

million households (29% of market). The second largest op- by another party. Only the broadcasters acting simultane- erator was state-owned Rostelecom (IPTV and cable) with ously as editorial boards for the same mass media are eligible a 23% market share. to apply for universal licences (that allow the distribution throughout the country and in all media, including cable, The state-owned Federal State Unitary Enterprise Russian satellite and terrestrial (subject to obtaining necessary per- Televisions and Radio Broadcasting Network (RTRS) acts as missions to use spectrum)). If the mass media is distributed the sole operator of digital terrestrial television distribution under an agreement with a third-party licensed broadcaster, in accordance with the national digitalisation programme. the licence is issued for specific media and territories. The Together with the Federal State Unitary Enterprise Space licensing procedure takes approximately one month and the Communications, the state satellite operator, RTRS distrib- licence fee is RUB7,500 (approximately USD130). utes the obligatory publicly available channels in two mul- tiplex packages. Third, a telecom licence for the provision of telecom services for the purposes of television or radio broadcasting is issued 2.2 Requirements for Obtaining a Licence/ to the operator/platform distributing the relevant mass me- Authorisation to Provide Services dia in its network under the provisions of the Communica- There are three levels of authorisation applicable to broad- tions Law. These licences are technology specific and can casting and media in Russia. be issued with regard to cable, satellite or terrestrial trans- mission of signal (see 3. 2: Requirements for Obtaining a First, to be distributed in the territory of the Russia Fed- License/Authorisation to Provide Services). eration all mass media are required to be registered (mass media registration). To apply for a mass media registration, 2.3 Typical Term for a Licence/Authorisation to a Russian corporate presence is mandatory. Foreign compa- Provide Services nies or individuals, as well as companies with foreign partici- The mass media registration is perpetual. Broadcasting li- pation exceeding 20% and individuals with dual citizenship cences are issued for the term requested by the applicant but cannot be holders of a Russian mass media registration or not exceeding ten years. control or manage in any form more than 20% in a party holding the mass media registration (Article 19.1 of the Mass The renewal process for the broadcasting licence is essen- Media Law). Starting from 1 January 2018, the list of per- tially similar to the initial application for the licence (Article sons banned from applying for mass media registration will 31.2 of the Mass Media Law). An application for the renewal be supplemented with individuals serving time in prison, of the licence must be filed no later than 60 days prior to the individuals with criminal record for crimes committed with expiration of the current licence term. Roskomnadzor can the use of mass media or other communication networks deny the renewal of licence if the licensee misses the dead- including Internet, or crimes related to extremist activities, line for the application, or, among other reasons, if there is and individuals under 18 years of age, or judicially incapaci- a pending violation of licence terms. tated. 2.4 Transfer of Licences/Authorisations to Other The mass media registration procedure requires filing of an Entities application with the attachment of corporate documents Mass media registration has to be re-issued in case of a and documents confirming compliance with the require- change in the owner of mass media or any of the co-found- ments of the Mass Media Law, and takes approximately one ers. The process is similar to the initial registration, and the month. The one-time state fee for the registration of a televi- new applicant has to provide evidence of transfer of rights sion channel for distribution in the entire territory of Russia to the mass media (a copy of an agreement, or a letter/con- amounts to RUB10,000 (approximately USD173.5). firmation from the original founder).

Second, a broadcasting licence is required for television or Pursuant to the Licensing Law and the Mass Media Law, radio channels. The broadcasting licence is issued by the broadcasting licences can only be re-issued in case of a cor- same authority, Roskomnadzor, under the provisions of porate reorganisation of the licence-holder. the Mass Media Law (Articles 31, 31.1-31.9), and subject to the foreign ownership restriction (see 1.6: Restrictions on There is no requirement to notify Roskomnadzor of the Foreign Ownership or Investment above). There are two change in the ultimate ownership of the licence-holder. licensing models available – ie, the broadcaster may act as However, such a transaction may be subject to clearance pur- the editorial board (in other words, be responsible for mass suant to the competition laws or the restrictions applicable media’s programming, which is typically the case where the to foreign ownership. same party holds both the mass media registration and the broadcasting licence), or distribute the mass media owned

9 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

2.5 Spectrum Allocated 2013) prohibits demonstration of the process of tobacco Russian television and radio channels are generally transmit- consumption or demonstration of tobacco products in any ted in separate frequency bands within the general range newly created audiovisual works, television or radio pro- from 49–860 MHz, in accordance with the Frequency Band- grammes, unless justified by the artistic concept. Any pre- widths Allocation Chart (see 4.5: Procedures to Identify viously created programmes featuring such materials are to and Assign Spectrum Among Competitors below). be preceded with social ads on health problems caused by smoking. The law also prohibits any form of advertising of 2.6 Restrictions on Common Ownership tobacco, including sponsorship. There are no rules limiting cross-ownership or vertical in- • Organising and promoting gambling via telecom networks tegration. is prohibited. • Certain messages are required to be broadcasted by mass The general rules on the control over market concentration media free of charge and within the required term, includ- set by the Competition Law apply to the Telecom Media ing, court decisions that require such placement, a message Technology industries. Among other things, prior clearance by the registering authority. State-owned mass media are is required for transactions involving parties holding a dom- required to publish mandatory messages by the state au- inant position in a specific market. A company is recognised thorities. All mass media are also required to place urgent as having a dominant position if its market share exceeds information or warning signals in case of natural or indus- 50% of the market for certain goods or services and it is ca- trial disaster, emergency, or military operations. pable of affecting the overall conditions of the goods/services • Advertising requirements (pursuant to the Advertising circulation in such market. In certain market conditions, the Law): competent authority (Federal Antimonopoly Service) may (a) General requirements (for advertising to be true and also determine that a party is dominant in the market even fair, contain no prohibited information and obscene if its market share is below 50% but exceeds 35%. language, not to call for violence, or refer to approval by state authorities or medical professionals, etc). 2.7 Content Requirements and Regulations (b) There are categories of goods and services totally Content requirements applicable to mass media include the prohibited for advertising or allowed subject to following: additional restrictions. For example, advertising of alcohol is prohibited on television channels and • Indication of mass media registration details – for a TV in the information and communications networks channel, such details are to be displayed at least four times (including internet). However, the demonstration of every 24 hours for 24/7 channels. ads displayed at the location of the event broadcasted • Age rating requirements – display of age rating marks, cer- live or in recording is allowed, unless the location tain limitations (such as timing restrictions) on distribu- is specifically set for broadcasting. There have been tion of 18+ content, all in accordance with the Children a few cases concerning broadcasts of events featur- Protection Law). ing display of alcohol advertising on foreign arenas • General Mass Media Law requirements prohibit: (especially during football games). (a) the use of mass media for the criminal purposes, for (c) Time limitations. The maximum allowed percent- disclosure of confidential and secret information; age of all types of broadcasted advertising is 15% of (b) distribution of information calling for or justifying the broadcasting time per hour (ie, nine minutes). extremism and terrorism, promoting pornography, Programmes of less than 15 minutes of duration are violence, cruelty; not allowed to be interrupted with advertising. Spe- (c) use of obscene language; cific requirements are set for religious programming (d) inclusion of any subliminal messages; and programmes for children. Advertising of certain (e) distribution of information on any entity liquidated goods (civilian weapons, gambling) are limited to the or banned from performing its activity under the time slot from 10pm to 7am. Anti-Extremism Law (No 114-FZ, dated 25 July (d) Importantly, starting from 1 January 2015, the 2002), Advertising Law prohibits any advertising on televi- (f) distribution of information on drug use or methods sion channels distributed on a paid basis only and/or to produce drugs; with the use of decoding devices (introduced by the (g) propaganda of non-traditional sexual relationships Federal Law No 270-FZ, dated 21 July 2014). Exempt among minors (under the Children Protection Law); from the ban are publicly available channels, chan- (h) there are also limitations set in respect of broadcast- nels distributed over-the-air with the use of limited ing from the site of counterterrorist operations. radio frequency resources, and the channels with • Anti-tobacco requirements. A set of rules in force since at least 75% of nationally produced programming 1 June 2014 (Federal Law No 15-FZ, dated 23 February (which is understood as content locally produced in

10 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

Russia or commissioned by Russian mass media with 2.10 Extent to Which Local Government no less than 50% of Russian ownership). Regulation is Pre-Empted (e) Obligatory use of . Regulation of broadcasting is adopted on the federal level (f) Russian legislation does not recognise such specific and may not be altered in separate federal states. type of advertising as product placement. In practice, it is either considered as concealed advertising (pro- hibited by law), or as an integral part of the plot and, 3. Telecoms as such, not advertising. (g) There are some specific provisions concerning 3.1 Important Companies broadcasts of sports events, such as the requirement State-owned Rostelecom is the leading fixed-line operator not to interrupt a live transmission or a recording in Russia, especially for long-distance telephony. The com- of an event with advertising, unless on a break. The pany also provides a wide range of other services, including restriction includes sponsorship advertising as well. broadband, mobile and IPTV. According to analytics the In case the event does not have breaks, it can be company’s revenues in 2016 are estimated at RUB300 billion. interrupted with advertising at such moments as to prevent leaving out any substantial information. Such Other largest telecom companies by income are the three advertising should not take more than 20% of the privately owned mobile operators: Vimpelcom (Beeline), total broadcasting time of the event (subject to the MegaFon and Mobile TeleSystems (MTS), whose profits in general requirements). 2016 range from RUB278-400 billion. 2.8 Difference in Regulations Applicable to Broadcasting Versus Cable 3.2 Requirements for Obtaining a Licence/ The principal differences applicable to cable broadcasting or Authorisation to Provide Services other multichannel video distribution platforms relate to the Telecom services are provided on the basis of telecom licenc- technical aspects of distribution. The general requirements es for the provision of relevant types of services issued under for mass media, content and advertising are not technology the provisions of the Communications Law and supporting specific. regulatory acts (eg, Governmental Decree No 87, dated 18 February 2005, listing types of telecom services and licence 2.9 Transition from Analogue to Digital requirements therefor). Typically, major operators providing Broadcasting a variety of services hold a number of licences covering all The federal digitalisation programme – officially called -“De types of services in separate territories of the Russian Fed- velopment of television and radio broadcasting in Russian eration (licences are not issued for the entire territory of the Federation in 2009-2018” – has the goal of ensuring that country). For example, mobile operator MTS holds about 98.4% of the Russian population is enabled to receive the 2,000 valid telecom licences. digital signal of terrestrial publicly available channels, and 98.1% of Russian population has the possibility to receive 20 The person applying for a licence files the application and digital FTA channels in their residences. the required supporting documents with Roskomnadzor, including the description of the telecom services and the The programme is implemented by the state-owned Federal network layout. If the services to be provided require the State Unitary Enterprise “Russian Television and Radio Net- use of spectrum, the applicant must also provide a relevant work” (RTRS), the natural monopoly handling the transmis- frequency use permit issued by the State Commission for sion of the over-the-air signal of all the obligatory general Radio Frequency Allocation (GKRCh). In cases where the and free access channels throughout the territory of Russia. frequency resource is limited, or the territory the person ap- In pursuance of the programme, RTRS is constructing new plies for has limited capacity of publicly available networks, transmission facilities and networks. including limited number pool, the licences can be issued on the basis of the results of tenders (auctions, or, in certain As part of the federal programme, the President has ap- cases, competitive contests). proved a list of publicly available channels to be distributed free of charge to all citizens of Russia (the so-called first mul- Telecom licences are issued in 75 days after filing of all -re tiplex) consisting of ten television channels and three radio quired documents, or within 30 days after the decision on channels. The Ministry for Connection and Mass Communi- the winner of the auction. Licenses are issued for the term of cations carried out the tender for ten positions in the second up to 25 years, but no less than three years. The fee, the same multiplex, also FTA. All networks and platforms are obliged as for the broadcasting licence, is RUB7,500 (approximately by law to provide their subscribers with the channels from USD130). the first and second multiplexes.

11 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

3.3 Transfer of Telecoms Licences/Authorisations 3.6 Provisions for Access to Public and Private to Other Entities Land The licensee can transfer the telecom licence to its legal suc- Provisions concerning land use for telecom purposes are cessor (Article 35 of the Communications Law) without ob- covered in the Land Code of Russia. There is a special cat- taining any additional approval from state authorities, unless egory of land used for the industrial purposes, including such transfer may result in restriction of competition. telecom and broadcasting.

When applying for re-issuance of the licence in its name, the The Land Code contains several rules with respect to linear new licensee has to provide Roskomnadzor with documents objects and communications infrastructure in the federal confirming the acquisition of the telecom network and infra- and municipal lands, such as rules on lease of such lands structure necessary for the provision of services under the for the installation of communications infrastructure, estab- licence. Where the relevant services are rendered with the lishment and recordation of easements on lands in which use of spectrum, the permission for such use will also have such linear infrastructure objects are installed and way leave to be transferred to the new licensee prior to the application rights for the purposes of repair of telecom infrastructure for re-issuance of the licence. objects.

It is noteworthy that, when re-issuing a licence obtained as a 3.7 Rules which Govern the Use of Telephone result of tender, the law does not require a new tender. Numbers In accordance with the provisions of Article 26 of the Com- 3.4 Regulations for Network-to-Network munications Law, the rules of use of telephone numbers are Interconnection and Access established and regulated by the Government of the Russian The Communications Law sets forth the framework of re- Federation (Decree No 350, dated 13 July 2004), subject to quirements for network interconnection (Articles 18-20). the Russian System and Plan of Numbers Pool (adopted by Network-to-network connections are governed by the terms the Order of the Ministry for Connection and Mass Com- agreed between the operators in their respective agreements, munications No 205, dated 25 April 2017). The federal subject to the rules sets forth by the Russian Government in authority responsible for the allocation, re-allocation and two decrees, for general network interconnections and the revocation of numbers is Roskomnadzor. The numbers are interconnection of broadcasting networks. allocated to operators upon request, subject to capacity and payment of state fees. In case of limited capacity the number Operators of publicly available telecom networks are obliged pool is allocated at an auction. to provide services to other operators under network inter- connection agreements. Disputes on interconnection-relat- The subscriber’s right to retain his number when switching ed issues are resolved through standard judicial procedures from one mobile service operator to another entered into in courts. effect in 2013 (introduced by Federal Law No 253-FZ, dated 25 December 2012). The Communications Law limits the Operators determined to have a substantial position in subscriber’s payment for such transfer at RUB100. The data publicly available networks (holding, with affiliates or in- base of ported numbers is financed from the deductions paid dividually, over 25% of the capacity in relevant geographic by operators to the universal service fund. numeration area) are required to provide equal terms for all connecting operators on the basis of standard published 3.8 Regulation of Retail Tariff contracts. The costs of connection to such networks are In accordance with the provisions of Article 28 of the Com- regulated by the state. Operators with a substantial position munications Law, the state controls the tariffs for the provi- cannot refuse interconnection with minor exceptions of sion of publicly available telecom services and postal services cases when such connection would contradict their licence by natural monopolies. Publicly available services include, terms, or applicable regulation. among others, local and intercity fixed-line calls, terrestrial transmission of publicly available channels, and others. The 3.5 Accounting, Functional and Legal Separation state regulation of such tariffs is carried out by the Federal Operators holding substantial positions in publicly available Antimonopoly Service (FAS) in accordance with the rules networks, operators of universal services and natural tele- set forth by the Russian Government (Decree No 637, dated com monopolies are required to keep separate accounting 24 October 2005) and the methodology for calculation of of different types of activities, provided services and differ- reasonable costs of services provision accrued by operators ent sections of telecom networks (including geographically) developed by the Federal Service for Tariffs of the Russian used for provisions of such services under the terms of the Federation (FST) (Order No 122-c/1, dated 9 June 2006, for Order of the Ministry for Connection and Mass Communi- publicly available telecom services, and Order No 211-c/1, cations No 54, dated 2 May 2006. dated 22 September 2009 for postal services).

12 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

3.9 Rules to Promote Service in Underserved Areas 1920-1980 MHz, 2010-2025 MHz and 2110-2170 MHz for Pursuant to Article 59 of the Communications Law, the uni- the development of LTE standard. Subject to certain require- versal service fund (defined as the “reserve for universal ser- ments, mobile operators holding relevant permits for the use vices”) is established for financing of provision of universal of frequencies in these bandwidths for UMTS standard can services and maintenance of the ported numbers data base. use these for LTE services without the need to modify such The fund is formed by the deductions (non-tax payments) permissions. made by all telecom operators in the amount of 1.2% of their revenues minus tax on a quarterly basis. The rules for accu- 4.5 Procedures to Identify and Assign Spectrum mulating and spending of the funds are set by the Russian Among Competitors Government in Decree No 243, dated 21 April 2005. Spectrum frequencies are allocated by the State Commis- sion for Radio Frequencies (GKRCh) with the Ministry for 3.10 Extent to Which Local Government Connection and Mass Communications in accordance with Regulations of Telecom Service is Pre-Empted the Frequency Bandwidths Allocation Chart adopted by Regulation of telecom services is adopted at the federal level the Governmental Decree No 1049-34, dated 21 December and may not be altered by federal states. 2011. GKRCh makes general decisions to allocate spectrum to specific services, and issues permissions to use certain bandwidths and frequency channels. In cases where the ra- 4. Wireless dio frequency resource is limited in the territory the opera- tor applies for, the spectrum is allocated at auctions. 4.1 Important Companies The mobile services market is dominated by three private The Federal State Unitary Enterprise Main Radio Frequency operators MTS, Vimpelcom (brand name Beeline) and Center acts under the authority of Roskomnadzor as an ex- MegaFon. pert entity performing analysis of electromagnetic compat- ibility, issuing expert evaluation of potential allocation of 4.2 General Requirements for Obtaining a Licence/ spectrum to specific operators and oversees in general the Authorisation to Provide Wireless Services technical operation of spectrum use in Russia. Wireless services are provided on the basis of telecom licenc- es issued by Roskomnadzor, as described in 3.2: Require- Compliance with the terms of allocation of radio frequencies ments for Obtaining a Licence/Authorisation to Provide is supervised by the Federal Radio Frequency Service. Services above, for data transmission services for the pur- pose of transmission of voice information and other types of General provisions on regulation of spectrum are set in Ar- telecom services. Because mobile operators provide a variety ticles 22-24 of the Communications Law. of services going beyond the original mobile telephony, they typically hold numerous telecom licences covering effective- 4.6 Unlicensed Spectrum Uses ly all types of services. Pursuant to Article 24 of the Communications Law, the use of spectrum without permission is prohibited, unless 4.3 Transfer of Wireless Licences/Authorisations to otherwise specified in the Law. In the absence of statutory Provide Wireless Services exemptions, there is no authorised unlicensed spectrum use See 3: Telecoms. in Russia.

4.4 Spectrum Allocation That said, there are sections of spectrum allocated for use Russian wireless operators use the following spectrum for without individual permissions on short range devices, wireless services: 900 MHz and 1800 MHz (GSM standard), subject to certain technical conditions, by the decisions of 2000-2100 MHz ( standard WCDMA), 791-862 MHz and GKRCh No 07-20-03-001, dated 7 May 2007, No 10-07-01 2500-2600 MHz for standards LTE and Wi-Max. of 15 July 2010 (as amended in July 2017).

On 11 December 2013 the State Commission for Radio 4.7 Government Policy/Regulation to Promote Frequencies (GKRCh) made the decision (No 13-22-02) to Next Generation Mobile Services introduce the principle of technological neutrality for fre- One of the goals set in the recently adopted national pro- quency bandwidths 890-915 MHz and 935-960 MHz for gramme “Digital Economy” (Order of the Government No development of 3G and bandwidths 1710-1785 MHz and 1632-p, dated 28 July 2017) is to ensure the consistent cover- 1805-1880 MHz for LTE technology. age by 5G mobile services of all major cities of Russia (with the population exceeding one million) by 2024. On 4 July 2017 GKRCh made another decision expanding the technological neutrality to allow the use of bandwidths

13 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

By decision of 4 July 2017, GKRCh allocated the first band- Joint Stock Company GlobalTel (affiliated with Rostele- widths (3400-3800 MHz and 25250-29500 MHz) to mobile com) is the local operator of global MSS satellite system of operator MegaFon through 15 August 2018, for the purposes Globalstar in Russia. of research and test development and construction of 5G standard services network in the territory of 11 cities where Largest satellite operators for broadcasting services are Tri- the 2018 FIFA World Cup events will take place. color (30% pay TV market share) and Orion Express (7% market share). 4.8 Price Regulation for Mobile Services In 2017 the Federal Antimonopoly Service (FAS) broadly 5.2 General Requirements for Obtaining a Licence/ criticised major mobile operators for setting the unreason- Authorisation to Provide Satellite Service able rates, both inside and outside of the country. Satellite operators hold telecom licences for relevant ser- As a result of extensive discussions, FAS announced in Sep- vices. (See also 3: Telecoms.) tember 2017 that the regulator agreed with operators that the elimination of roaming would not affect the price of 5.3 Transfer of Satellite Licences/Authorisations to services for subscribers. The Ministry for Connection and Other Entities Mass Communications has confirmed that it will support See 3: Telecoms. the changes in legislation to prohibit roaming services, if the conditions for the subscribers do not deteriorate. 5.4 Spectrum Allocation to Satellite Service A number of separate frequency bandwidths are allocated FAS earlier expressed its intentions to have roaming prac- to satellite services in accordance with the Frequency Band- tices eliminated by the first quarter of 2018. widths Allocation Chart.

4.9 Regulation of Government and Commercial 5.5 International Telecommunication Union Wireless Uses Membership There are no specific requirements for Government wireless Russian Federation is a member of ITU. GKRCh approves uses. A portion of spectrum is allocated to the Ministry of annual plans for preliminary publication, coordination and Defense of Russia. registration of satellite networks with ITU, as provided by Roskomnadzor. 4.10 Extent to Which Local Government Regulation of Wireless Service is Pre-Empted 5.6 Provision of Service by Foreign-Licensed Regulation of wireless services is set at the federal level and Satellites may not be altered by federal states. The terms of use of foreign satellite systems (registered in ITU by foreign state administrators) in the territory of the Russian Federation are specified in the rules adopted by 5. Satellite Governmental Decree No 1194, dated 14 November 2014 (as amended in August 2017). Foreign satellite systems can 5.1 Important Changes be used for the purposes of development of Russian satellite The largest Fixed Satellite Services operator in Russia is the systems and for Russia’s integration in international systems Federal State Unitary Enterprise Space Communications on the basis of decisions issued by GKRCh and subject to (GPKS). The company operates an orbital satellite constella- co-ordination of such foreign systems with Russian satellite tion of 12 geostationary satellites and provides a large variety systems and ground communication services in accordance of satellite services. with the ITU regulations. The use of foreign satellite systems for the needs of state authorities, state defence and enforce- Another national satellite operator, Joint Stock Company ment of law and order is allowed only in exceptional cases, Gazprom Space Systems, operates four orbital satellites of if such needs cannot be served by local capacities. Yamal series. Together Gazprom Space Systems and GPKS provide almost the entire space resource for the Russian 5.7 Milestone and Due Diligence Deadlines market. There are no statutory requirements concerning deadlines for construction and launch of satellites by Russian operators A number of FSS operators in Russia provide a wide range of services to large corporations and state enterprises and regulatory authorities.

14 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

6. Internet/Broadband • On 1 July 2017 amendments to the Information Law came into force regulating online audiovisual services, the so- 6.1 Important Companies called online cinemas. The regulation is applicable to According to TMT Consulting, TOP-5 operators of broad- websites, webpages and software (i) used to form and/or band hold together 68% of the market in Russia and 65% distribute online an aggregate of audiovisual works acces- in Moscow: Rostelecom, ER-Telecom, MTS, Vimpelcom sible for a fee and/or subject to viewing advertising aimed (brand name Beeline) and TTK (by order of market share at Russia-based audience, and (ii) accessed by no less than and revenue). 100,000 Internet users based in Russian territory per day. Among other things, the new regulation introduced addi- 6.2 Regulation of Voice-Over-IP Services tional compliance obligations for such services and a 20% VoIP services are provided by operators holding telecom foreign control limitation (whether direct or indirect), licences for data transfer for purposes of voice information similar to that applicable to registered mass media. transmission. • The other set of rules applies to online messengers. The amendments to Article 10.1 of the Information Law will 6.3 Interconnection and Access Regulatory come into force on 1 January 2018 to introduce additional Conditions to IP-Based Networks requirements for the parties providing instant message ex- The legislative position towards the connectivity of data change services, information systems or software designed transfer networks of telecommunication networks has not or used for the exchange of messages exclusively between been entirely consistent. At the moment, rules for intercon- the users of such system/software, where such exchange nection of telecom networks adopted by Governmental De- is inseparably tied to the communication services, where cree No 161, dated 28 March 2005, allow the connection of sender of the message identifies the receiver, and no in- IP-based networks to other networks. Over the last several formation is posted for public access (ie, the messaging is years there have been legislative initiatives to exclude the private). The messenger services will be obliged to iden- data transfer networks from the Rules; however, despite tify all users by phone numbers through entering into user the concerns of VoIP operators, the regulation remains un- identification agreements with mobile operators, restrict changed. distribution of bulk messages and illegal information upon request from Roskomnadzor, ensure confidentiality, pro- 6.4 Net Neutrality Requirements vide opportunity to refuse messages from certain users and There are no legal net neutrality requirements in Russia. The ensure distribution of messages from the state authorities. Federal Antimonopoly Service (FAS) has expressed its sup- port for the principle on numerous occasions, but confirmed 6.7 Extent that Local Government Regulation of that it sees no need to introduce specific requirements to Internet/Broadband Service is Pre-Empted legislation. In 2016 FAS published the Basic Document on Regulation of Internet and Broadband services is set at the net neutrality on its website explaining the main principles federal level and may not be altered by federal states. and goals of the idea, which was supported by major telecom operators MTS, Beeline and MegaFon. 7. Privacy 6.5 Government Regulation of Internet/Broadband The state programme “Information Society (2011-2020)” 7.1 Government Access to Private adopted by Governmental Decree No 313, dated 15 April Communications 014 sets as one of its goals that 95% of Russia’s population One of the licence terms and a condition to hold a telecom should have broadband access to Internet by 2020 licence is to ensure compliance with requirements for net- works and telecommunication facilities for the performance 6.6 Over-the-Top Internet-Based Providers of investigative activities. The general rules of cooperation The OTT services had until this year remained largely un- between telecom operators and competent state authorities regulated, and no specific licensing requirements had been performing investigative activities are set by the Govern- established. For telecommunications services, the operators ment Decree No 538, dated 27 August 2005. Pursuant to used to obtain telecom licences for data transmission or for the Decree, the authority responsible for communicating telematics services, or for telecom services for cable broad- with operators, developing a plan for installation of relevant casting to be able to provide the online streaming of TV technical means and monitoring any changes thereto is the channels. Federal Security Service (FSB) and its departments.

This year, two sets of rules have been made law: Telecom operators are required to maintain accurate data- bases of subscribers, keep the data for at least three years and provide such information to FSB at request.

15 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

A series of orders issued by the Ministry for Connection Under Article 10.4 of the Information Law, owners of news and Mass Communications set forth the technical require- aggregator websites or apps aimed at Russian audience and ments and connection specifications for various networks. accessed by at least one million users per day are required For example, Order No 73, dated 27 May 2010 contain such to check accuracy of information of social importance and requirements for data transfer networks. delete incorrect information immediately upon request from authorities. Technical means for investigations are placed at communi- cation centres (hubs) of relevant networks and effectively 7.4 Obligation of TMT Companies to Block Access enable the access by FSB to all telecom networks in Russia. to Certain Sites or Content Performance of any investigative activities is subject to the Russian regulation provides for numerous grounds to block provisions of the Federal Law No 144-FZ, dated 12 August access to websites. 1995 (as amended). The cornerstone principle, set in Arti- cle 8 of the Law, is that the investigative activities that limit Roskomnadzor manages and operates the “Register of do- constitutional rights to privacy and secret of correspondence main names, URL and webpage addresses allowing iden- are subject to a court order. In exceptional cases, however, tification of websites that contain information prohibited enforcement authorities can go ahead and obtain the judicial from distribution in Russia” (Article 15.1 of the Information order or approval afterwards, which often raises concerns Law). Websites are included in the register upon decisions about potential abuse. by competent authorities. The grounds for the content to be blocked are distribution of child pornography, methods 7.2 Use of Encryption Technology of development, production and locations for purchase Use of encryption (cryptographic) software and hardware, as of drugs, methods of committing suicide, information on well as performance of encryption (cryptography) services minors, identification of victims of crimes, information on and import of encryption (cryptography) devices and other gambling in violation of statutory rules, information on re- activities involving encryption (cryptography) are subject mote sales of alcohol; besides, certain online information to licensing and certification procedures set forth in Gov- may be held prohibited from distribution by court. Website ernmental Decree No 313, 16 April 2012. Certification and owners and hosting companies can avoid inclusion in the licensing of encryption (cryptography) related activities are register if they delete prohibited information immediately carried out by the Federal Security Service. upon request from Roskomnadzor.

Importantly, Russian regulation does not sufficiently elabo- Another procedure is set in Article 15.3 of the Information rate on the distinction between the concepts of cryptography Law for the limitation of access to information distributed in and encoding which results in the lack of clarity about some violation of Russian legislation, including calls for extrem- technologies and services, such as messengers and other ism, riots and massive public events not approved by the common online services, as to whether such activities and authorities. software are subject to licensing and certification. Further, a website can be blocked (and included in a separate 7.3 Liability of TMT Companies for Content register maintained by Roskomnadzor) for violations of pri- Carried Over Their Networks vacy rules (Article 15.5 of the Information Law). For exam- Article 1253.1 of Part IV of the Civil Code of Russia sets ple, LinkedIn was blocked in the territory of Russia upon a forth the specific terms of liability for copyright and other court ruling for the failure to comply with Russian personal intellectual rights infringement of an information interme- data localisation requirements (see 5: Satellite, above). diary, a person delivering materials in telecom network, including Internet, a person providing an opportunity for A website may also be blocked (including in perpetuity) placement of materials or information on its location, or a upon a court order for copyright infringement. person providing access to such materials. Such interme- diary’s liability arises based on fault and can be exempted Telecom operators providing Internet access are mandated provided that such intermediary to block webpages included in Roskomnadzor’s stop lists. There are a few acts setting forth the procedures of interac- • made no changes to materials: tion between Roskomnadzor and operators, including via • was not the party that initiated the transfer; and operators’ personal accounts set up in the state informa- • had no knowledge of potential infringement. tional system. Starting from March 2017 operators who fail to block access are subject to fines for up to RUB100,000 The intermediary providing opportunity for placement of (approximately USD1,750) per occurrence. various materials is not liable if it takes timely measures to stop violation upon a written request from the right-holder.

16 Law and Practice RUSSIA Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

7.5 Obligation of the TMT Companies to Retain 7.6 Prohibited of Unsolicited Communications Customer Data Article 44.1 of the Communications Law, introduced in Operators are bound with general accounting and tax re- 2014, prohibits sms-spam in wireless telecom networks – porting obligations that require storage of customers data. ie, automatic delivery to subscribers of short text messages In addition, the following requirements apply, as detailed without their consent. below. The Advertising Law also prohibits telecom networks from Information storage requirements are set for telecom opera- advertising by automatic dialling without human participa- tors as part of compliance with investigative activities re- tion (automatic calls, automatic messages). Distribution of quirements (see 7.1: Government Access to Private Com- advertising in telecom networks is always subject to sub- munications above). scribers’ consent. The burden of proof of presence of such consent lies with the advertisement distributor. A similar requirement is set in Article 10.1 of the Informa- tion Law for parties organising online distribution of infor- mation, understood as persons operating information sys- 8. Future tems or software designed or used for the receipt, transfer, delivery or processing of electronic messages of Internet 8.1 Status and Process of Convergence users. Such parties are required to keep the metadata of the Russian Telecom Media Technology market follows general communications between the users, as well as the informa- convergence trends, with most of the telecom operators pro- tion on such users for one year, and the messages for six viding a wide range of services. Mobile operators tradition- months. The information has to be provided to investigative ally provide broadband and IPTV services in additional to authorities at request. wireless, and cable operators develop additional services, such as VoD and other. In accordance with the telecom licence terms, operators of universal services, operators of data transfer and operators There are traditional printed media and terrestrial television, of telematics services, when providing Internet access at col- as well as radio broadcasters that explore new media with lective access points (public wi-fi) are required to identify online streaming and mobile apps (including radio broad- every customer by full name by using his or her identifica- casters launching YouTube or Telegram channels and adding tion document (passport) or by other means allowing se- online media to their operations). At the same time, one can cure identification, including by mobile network subscriber also see purely online media reaching out to social networks number. As any other data, this information is to be kept by and otherwise exploring all opportunities of the new media. the operator for at least six months under the investigative activities regulation. 8.2 Changes to Statutes, Laws or Legislation On 1 July 2018 two federal laws are to come into force in- For foreign or international online services providers col- troducing amendments to the Information Law and other lection of Russian users’ personal data can create a risk of regulation. In the mass media, the laws were dubbed the violation of Russian data localisation requirements. Effective “Yarovaya Law” or the “Yarovaya Package” after one of its from 1 September 2015, all operators of personal data of authors, the State Duma deputy Irina Yarovaya, who has Russian citizens are required by Personal Data Law to store been featured in the headlines many times over previous and perform certain processing actions with such data only few years with legislative initiatives aimed at regulation of with the use of databases physically located in the territory of information distribution. Russia. Failure to comply with the requirement can result in blocking of the entire service, as it happened with LinkedIn The regulation requires Russian telecom operators to store in November 2016. in the territory of the Russian Federation the records of all voice data, correspondence, pictures, videos and other mes- Starting from 1 July 2018 the amendments introduced as sages exchanged, downloaded, shared or uploaded by users part of the so-called “Yarovaya package” will impose on tele- for six months from the moment of such transmission, re- com operators additional information storage requirements, ceipt and/or processing. The details of the fact of receipt or essentially similar to those described above with respect to transmission of information shall be stored for three years the parties organising online information distribution (see and provided to law enforcement authorities upon request. 8.2: Changes to Statutes, Laws or Legislation, below). As If the information requested by the law enforcement authori- of now, the requirements of Article 10.1 of the Information ties is encrypted, the operator shall be obliged to decrypt it Law do not apply to licensed telecom operators. at the risk of a fine amounting to RUR800,000–1,000,000 (approximately USD12,500–15,600). The new provisions

17 RUSSIA Law and Practice Contributed by King & Spalding Authors: Alla Naglis, Xenia Melkova

also expand the powers of Russian enforcement officers with On 1 November 2017 new regulation will come in force respect to monitoring of data. prohibiting the use of any technologies allowing access to blocked websites (VPN services, browser plug-ins, anony- The laws were passed despite heavy criticism from telecom- mous search engines) in the territory of Russia. The new leg- munication operators, as well as the Ministry for Connec- islation will vest Roskomnadzor with the authority to moni- tion and Mass Communications. The operators state that tor and block access to websites providing services for users the implementation of the new requirements would result in to access resources previously blocked by Roskomnadzor them incurring costs amounting to billions in US dollars and (see 7.4: Obligation of TMT Companies to Block Access would collapse the industry. In addition, concerns have been to Certain Sites or Content, above). Together with the de- expressed that the new regulation may also come in conflict scribed obligations of messengers and public wi-fi operators with the EU General Data Protection Regulation 2016/679, to identify users, this regulation reflects the recent tendency since Russian laws do not contain any specific exemptions for limitation of online privacy in Russia. for collection and storage of foreign citizens’ data in Russian telecom networks. 8.3 Changes to Government Ministries, Regulatory Agencies or Privatised Entities Despite the scheduled application starting from July 2018, There is no information on planned changes in the structure the operators and regulatory authorities are still discussing of regulatory authorities for TMT industry. the possibility of modification of requirements or postpone- ment of the entry into effect of the new rules. 8.4 Identification of Assignation of Additional Spectrum The recently adopted Federal Law No. 187-FZ – “On safety There are no details on scheduled auctions for distribution of of critical information infrastructure” – will come into force spectrum for wireless services available as of the date of this on 1 January 2018. The Law defines critical infrastructure overview. Competent authorities are yet to determine the as an aggregate of information systems, telecom networks, spectrum that will be allocated for 5G. As described above, automatic control systems of state authorities and entities as wireless operator MegaFon was granted with a right of tem- well as private entities in the sphere of healthcare, science, porary use of frequencies for testing of 5G services during transport, communications, energy, banking and finance the 2018 FIFA World Cup. However, this will not necessarily and other selected areas. The Law is effectively a framework result in advantage for the company in future development regulation, but new regulations and requirements for opera- of the standard. tors of the relevant infrastructure may stem from it, that may put additional burden on their business and the market in general.

King & Spalding 2 Tsvetnoy blv. Moscow 127051 Russian Federation

Tel: +7 495 228-8500 Fax: +7 495 228-8599 Email: [email protected] [email protected] Web: www.kslaw.com

18